Removal of an auditor of a company before expiry of his term is governed by the provisions of Section 140(1) of the Companies Act, 2013. As per this:
- The Board of Directors of the company does not have the power to remove the auditor before expiry of his term.
- An auditor can be removed in this manner only by passing a Special Resolution at the general meeting of the company.
- It also requires the previous approval of the Central Government in that behalf in the prescribed manner.
- Moreover, the auditor is required to be given a reasonable opportunity of being heard before taking any such action under this provision.
As regards reporting the matter to the Institute of Chartered Accountants of India (ICAI) in respect of any misconduct of the auditor, you may file a complaint with them as per their procedure.
Section 140(1) of the Companies Act, 2013, is reproduced below:
“140. Removal, resignation of auditor and giving of special notice.—(1) The auditor appointed under Section 139 may be removed from his office before the expiry of his term only by a special resolution of the company, after obtaining the previous approval of the Central Government in that behalf in the prescribed manner:
Provided that before taking any action under this sub-section, the auditor concerned shall be given a reasonable opportunity of being heard.”
Dr. Ashok Dhamija is a New Delhi based Supreme Court Advocate and author of law books. Read more about him by clicking here. List of his Forum Replies. List of his other articles. List of his Quora Answers. List of his YouTube Videos.
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